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Politics & Government

City Budget Approved for FY 2011-12

Council takes a swipe at the city's structural deficit in the general fund, estimated at $12 million, and closes the gap more than halfway.

The Milpitas City Council passed its budget for the next fiscal year on a 3-2 vote, with the mayor and vice mayor opposing.

Council members passed the proposed $140.8 million budget on Tuesday night at a budget hearing without making changes to staff recommendations. 

"I like what's in front of us," Councilwoman Debbie Giordano said in her closing remarks. "We're moving the city forward." She said she hoped to close the remaining structural deficit in the general fund by the end of next fiscal year.

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The largest savings this fiscal year were made by employees in salaries, benefits, retirement contributions and furloughs. The city has budgeted that amount as a projected $5.9 million in general fund savings.

"I'm not a fan of throwing unions or employee groups under the bus," said Councilman Armando Gomez. "Your job is to ask, and our job is to say no." He said he would consider placing a tax measure on the ballot for the election. "It's not just we have a spending problem. We have a revenue problem," he said.

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But some felt more concessions could have been made on part of the unions.

Mayor Jose Esteves, who voted against passing the budget, said he was not in favor of eliminating the city's preschool program, something that brought out many parent-advocates.

"I'm not comfortable with cutting people and programs if we can't address salaries and benefits," he said.

Balancing the Budget

In the $65.8 million general fund, the city negotiated with six unions for a savings of an estimated $5.7 million in concessions plus $200,000 in departmental savings.

Councilwoman Althea Polanski called the concessions "a tremendous dent in our deficit.” 

The additional $500,000 comes from cuts in programs, including staff, from the preschool, Tidal Waves swim program and D.A.R.E. The preschool was the only program to be eliminated.

Councilwoman Debbie Giordano had compliments for the staff's efforts to save the programs. “I think it's great, preserving four out of five programs,” she said. 

The resulting $6.4 million in savings is an improvement from previous years, said City Manager Tom Williams. For the past decade, the city has had a general fund structural deficit ranging from $9-$12 million.

The city plans to make up the remaining difference of $5.6 million by drawing from two funds, the Public Employees' Retirement System rates stabilization reserve and a Redevelopment Agency loan repayment back to the city. 

"We've more than cut in half our structural deficit. It's too big of an amount to address in one year," said Vice Mayor McHugh. "The last two things [PERS and RDA] are kind of a stop-gap [measure] if you will ..."

Plans for Additional Restructuring

Since 2002, general fund expenditures have exceeded revenues for the city. And next fiscal year, costs for employee benefits and retirement are expected to rise by $2 million next fiscal year, said Emma Karlen, finance director.

To close the structural deficit even further, Williams said he plans to shift action and work on a long-term strategic plan. More information is expected in August after the city council returns from its July recess. 

“Goals and objectives would be established," he said. "We will look at our entire organization and ask how are we conducting business, increasing efficiencies and delivering services. Where can we improve to our optimum level?”

Councilman Gomez gave an example of a departmental reorganization in which Greg Armendariz has the job of both public works director and city engineer. It saved the city $200,000 a year, according to Williams.

Higher Fees for Recreation Programs

About $229,742 of revenue could come into the city with higher recreational fees. The city voted to approve new higher resident and non-resident fee schedules for Milpitas Sports Center, Barbara Lee Senior Center, After the Bell and Rainbow Theatre.  It would also include rentals for parks and facilities.

Polanski suggested some amendments to the fees for families and children. She said, “I am pleased to see us focusing on our core services. More needs to be done over the next 2-3 years. The Financial Subcommittee could review the fee list.”

The new parks and recreation fees were unanimously approved without changes on a motion by Giordano and seconded by McHugh.

New fees will go into effect July 1 or at the beginning date of a program, according to Greiner in an email.  Some fees are already advertised and they will not change until the program begins again.

New Partnership with the Milpitas Chamber 

Instead of being cut as previously discussed by the council, the Milpitas Chamber of Commerce rolled out a new business recruitment and retention program. 

In the old partnership, the city provided the chamber $32,000 in a year. The new budget provides the chamber $20,000 for the first quarter. 

In the second quarter of the fiscal year, the chamber would need to come back to the Redevelopment Agency for additional funds, said Williams. 

Gomez asked about ways to measure the chamber's performance. Williams responded that property tax, sales tax and the number of jobs and employees can be quantified up to a point. 

Gomez asked about how long it would take to see results?” Williams responded, “We won't see a windfall right away. We'll get measurable progress.”

Giordano said, “I think the chamber's proposal is exciting. We are labeled as a city of innovation. Measuring a year or more would be better than just a
quarter. I want to commit to a year.” 

Polanski said she discussed the proposal with chamber
president Robert Paedon and that it “does go to our core services, one of the things we are looking for that is different from past years.”

Chamber CEO Carol Kassab said, “Economic development and retention of businesses is our new program. We're excited about working together. Quarterly reports will be provided. Our newly renovated trade show is planned for the fall. I'm one of eight invited to meet with our Assemblyman Bob
Wieckowski.”

Paedon thanked the chamber and city staff for their work in crafting the new BRIM (Business Retention In Milpitas) program.

“We plan to reach 24 companies each month,” he said.

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